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Acquisition Strategy
Detailed explanation of the real estate purchase plan.
The elephant in the room is the current fed rate accompanied by the high prices of homes we have on the market today. Our strategy is built from market research and data collection from different sources such as Reventure Consulting, Redfin, Realtor, and Freddie Mac. There are localized trends that we are seeing like the drop in mortgage applications, pivots in short term rentals to long term, and properties staying on MLS for longer than 100 days. We are open to location, but primarily looking to purchase in the South East of the United States. The examples below are from the perspective of Atlanta, GA.
After reviewing market data from the our many sources we determined that the locations we wanted where Atlanta, GA; Tampa, FL; Raleigh, NC or Austin, TX. We share our market research with our NFT holders in our discord community regularly.
One of our focus locations is Fulton County where you can find many multi-unit properties located near elementary & high schools as well as colleges. Many properties in the area are in great neighborhoods that would be great for renting to families that need 2 to 3 bedrooms, college students. There are also major businesses in that area like the Mercedes Center which has a great source of employees that are looking to reduce their commute.
We are using Atlanta's metro data tools to track evictions being registered. You can follow along with us as well as we use this data to monitor when properties will begin to consider forbearance or where we will be making cold calls to start offering "Subject To" purchases.
Using data from Zillow we can start to see what it would look like in Atlanta, GA because the home affordability index is starting to show no one can afford to buy the homes in the area that actually live there. This doesn't account for those migrating to Atlanta, but with the recent drop in loan applications. It is safe to assess that migrations have slowed or stopped in comparison to the 2020-2021 housing boom.
HAI (House Affordability Index) is the measure of the median income from a location (better to look in specific locations) or zoomed out the whole USA (not useful in my opinion). HAI = ( Median Family Income / Qualifying Income ) * 100.
(i.e. if a home costs $3k/m but the median citizen can only afford $2,000/m then it is not affordable)
Price/Earnings Ratio: Re:venture Charts
The yellow line represents the average. When using the P/E of the Atlanta, GA market you can see that we are at a 6.8x of what the average P/E should be. This gives us a potential downward crash (some will say correction) of 36.2%. In our opinion anything 20% or greater is a crash and not a correction. This is where we will start buying property.
As you can see from the chart below the metrics from the P/E are starting to make more sense. The median listing prices of homes in the Atlanta area are starting to come down. This will only continue with rate hikes by the federal reserve and the longer properties sit on the market without offers.
Media List Price Re:venture Charts
NFT sale revenue is not used to purchase property, but for the development of the Whimsy software and legal work being completed.
This is a loan structure that if approved allows the loan to use the potential income generated by the property for the servicing of the loan.
We will be focusing on 30 year conventional loans for properties that do not require much repair or remodeling. This will help reduce costs of IPMI insurance and when we pay a downpayment of 25% or more we can reduce our monthly costs significantly.
These loans are for commercial and investment only and will be used on properties that do not fall into compliance with conventional loan requirements. These loans will be leveraged if needed by putting up the "tangible asset" (i.e. property) to back the value of the loan.
We have our own private connections to individuals that are interested in using the platform to list properties they already have and other that have capital that will be partnering with Whimsy to purchase property that will be offering equity share ownership. Private capital will also be in used in tandem with the loan types listed above.
We believe based on the trending downturn that there is going to be a sweet spot of capitulation in the housing market starting in the beginning of Q3 2023. We are reviewing market data regularly and keeping an eye open for entries in the market such as off market deals, pre-foreclosure, and qualifying quick claim deed opportunities.
We plan on sticking to one location as we lay the ground work for the initial property seeding phases. During this time we will be managing our own properties. This entails hiring inspectors to review the land, structure, roof, electrical, plumbing, and overall safety. Once the platform reaches a certain level of success and user traffic we will open the platform to partnerships with property management services to be offered to property owners listing on the platform.
Last modified 2mo ago